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Wednesday, May 09, 2018

Di Leo: Local Shade and International Trade

By John F. Di Leo -

As the weather warms in May, and neighbors start taking constitutionals around the neighborhood again, we enjoy the fragrance of the flowering trees – apple, cherry, magnolia – and the spring colors of the flowering hedges – lilac, forsythia, and rhododendron. True, the flowers don’t last long… so we enjoy them while we can.

As we watch, the buds grow fatter on the branches, as bursting leaves prepare to follow the spring blossoms. Once the early petals are shed, these bushes and trees will be covered with leaves, as the magic of photosynthesis takes over and enables our neighborhood greenery to thrive for another year, rewarding us with the tree-lined streets we treasure.

To look at them, you’d never know that there’s a silent attacker, burrowing deep inside some of our trees – especially the quieter ones, the non-flowering trees like our stately oaks, elms, white fringetree, and especially ash and maple – those invasive insects of distant origin that feed their young by destroying our trees.

In response to this danger, this time of year also brings public service announcements, on radio and television, in print ads and facebook posts, and at DNR displays at state and county fairs. If you go camping, don’t move firewood! … If you do yardwork, look for the signs of damage! … If you spot Asian Longhorned Beetles or Emerald Ash Borers somewhere… anywhere… or worse yet, if you spot their larvae or telltale signs on tree trunks… then call your local village or city hall.

These bugs can and do destroy whole forests, because they come from far away, so the trees of North America have developed no immunity to them. Millions of these trees have been killed in just these past twenty years, all by these and other, similar pests, primarily from China, India, and elsewhere in Asia.

And that’s what’s interesting. That they are foreign. They do incredible economic and ecological damage to Chicago, Milwaukee, Detroit, New York, Newark, Toronto… and all the other cities of North America… not to mention the damage they do to the forested countryside in states where ash and maple (the trees most severely at risk) make up a fifth or even a fourth of all trees.

But if they are foreign, well, how did they get here? For that story, we must look far… all the way to the other end of the globe.

An Alarm Sounded in Australia

For thousands of years of human history, Australia was isolated from the rest of the world. We all know the stories of how the continent “down under” developed in its own direction, with marsupials and other animals utterly foreign to the animals of the rest of the world. Even after the discovery of Australia by Captain James Cook in 1770, the interaction between Australia and the rest of the world remained minimal. Distances were simply too great.

…Until the 1950s, when transportation visionary Malcolm McLean finally developed a strategy for bringing the great American concept of mass production to international shipping, by commercializing the intermodal container, a detachable box that’s not permanently attached to the wheeled chassis on which it rides on the road.

Malcolm Purcell McLean, founder of Sea-Land Industries, gets the credit for making container shipping a reality. Now we could put 300, 600, even a thousand truckloads on a single ship, not by loading them pallet by pallet or bale by bale, but by using a gantry crane to swing an entire trailer – in standardized lengths, usually of 20’ or 40’, occasionally 45’ – onto a stack of other containers in the well of a ship custom-designed to handle such things. Today, the giant containerships of the panamax and post-panamax classes can handle 10,000, even 20,000 TEUs (“TEU” stands for “20’ Equivalent Units,” the standard measurement of the modern containership… so, for example, a 20,000 TEU ship could hold 10,000 forty-foot-long containers).

This invention worked miracles for the world economy... and in so doing, it enabled more cargo to travel internationally than ever before. We could export, we could import, we could enjoy foreign products, and foreigners could enjoy ours, at a transportation cost made affordable by the sheer volume managed by these wonderful new ships.

It’s a far cry from the cargo ships of centuries past, often too weak to survive a storm, usually with a shipper’s total net worth wrapped up in a single voyage. This new transportation model allows anyone to ship anything affordably. And so we all do. By the millions of tons. In all directions. Each and every day.

Back to Australia, now… All of a sudden, like everyone else, Australia was receiving cargo from all over the world, and by the 1960s and 1970s, they realized that this cargo often contained tiny hitchhikers who lacked natural predators in Australia. So Australia’s government did the logical thing: they started to mandate that all cargo shipments must be fumigated before shipment to Australia; shipments lacking a fumigation certificate would have to be fumigated on arrival, or returned to their place of origin. An expensive approach, adding a week of time and hundreds of dollars to every container shipped, but it worked for Australia.

Eventually, other countries realized that this was a good idea – truth be told, we in North America are at more risk from such pests than Australia is – so other countries started to talk about joining the club too, also exploring approaches that would require exporters to fumigate or heat-treat their containers before shipment, so their citizens would only import the goods they wanted, not the pests they didn’t. Unfortunately, as is to be expected in such a global array of parties, each country contemplated a different way to address the issue. Should we mandate Methyl Bromide, or some other chemical? And at what concentration, and for how long? Should we allow heat treatment? If so, what temperature, and for how long? Most challenging of all, what do we do about products that would be damaged by such treatments?

The questions were endless, and the possibility of a crushingly complex matrix of different mandates posed some very real risks to the global supply chain.

By the late 1990s, global commerce was at risk of coming to a standstill.

Standardization under ISPM15

As we know from watching daily news reports of failed international efforts, whether political or non-political, it’s not easy to achieve consensus across the globe… but we amazingly came very close at around the turn of the millennium, where this particular issue was concerned.

The first step was recognizing that the cargo really wasn’t the problem at all.

Chinese and Indian beetles weren’t really living in the goods themselves; they were living in the wooden packing materials that shippers were using to transport their goods. Once this critical change in focus occurred – in moving from treating the cargo to treating its packaging – the right choices fell into place.

We no longer have to fear ruining the goods with poisonous chemicals or high heat, because we can just treat the solid wood packing materials (SWPMs) – the pallets, crates, cradles, dunnage, and blocking-and-bracing lumber – before it’s anywhere near the cargo! (Options for fumigating an entire loaded container remain available, but such an extreme should rarely be necessary).

The International Plant Protection Convention (IPPC) standardized the modern solution to this very modern problem in the early 2000s. Called the International Standards for Phytosanitary Measures No. 15 – commonly known simply as ISPM 15 – this set of regulations sets forth standards for shippers, lumberyards and export craters, so that each would know the safe way to protect the supply chain from foreign invasive species.

Gone were to be the distinctions between hardwood and softwood that many countries had begun to implement. Gone were to be the differing standards of chemical concentration or temperature or exposure time. And gone would be the risk of transporting these awful bugs all over the world.

The ISPM 15 approach is simple. Ensure that the wood you use is bark-free, and has been fully fumigated or heat treated by an IPPC-approved company at the concentration levels and time required… and finally, ensure that that provider has indelibly marked it with an approved ISPM 15 mark (it looks like the top of a stalk of wheat), so that any Customs official in any country can confirm at a glance whether the SWPMs are legal or not (there is a bit more to it, of course, but not much. Contact your lumberyard, local pallet provider or export crater for details... or see the USDA-APHIS website for the specific regulations).

The agreement exempts manufactured wood products like plywood, OSB, MDF and other forms of fake or engineered wood. The ISPM 15 approach is only required for real wood, because real wood is the only kind of wood that would attract an infestation. But this exemption applies only to the manufactured wood, so a shipper must be cautious. A crate might be made of plywood surrounding a frame of real 2x4s; a pallet might be made of an OSB surface over runners of real 2x4s and 1x4s. Any such real wood must still be treated as required by ISPM 15, either before or after the crate or pallet is constructed.

Between 2004 and 2010, almost all of America’s trading partners signed on to this simple standard, directing their Customs ministries (or other regulatory agencies) to enforce this obligation: any import shipment that contains any kind of SWPMs – from pallets to crates, from dunnage to blocking-and-bracing lumber – must be visibly compliant with ISPM 15, or the shipment can be ordered fumigated at the importer’s expense, re-exported at the shipper’s expense, or even destroyed. Manufacturers and other shippers quickly learned to add the ISPM 15 requirements to their purchase orders when dealing with lumberyards, pallet vendors and export craters.

Today, after over a decade in place, there should be few exporters or importers in the world unfamiliar with these requirements. And the result is that the world’s trees are protected from destructive foreign pests… without putting a stop to commerce itself.

For that could easily have been the approach! If foreign cargo brings bugs, the temptation must have been great for some on the protectionist side of economics to use those bugs as a justification to stymie international trade outright. Fortunately for us all, the IPPC’s compromise approach – one simple standard for treatment and marking of SWPMs, worldwide – prevailed, and allowed the flow of international trade to continue unimpeded.

Some countries still find ways to make it challenging… despite signing onto the agreement, China, Australia, and some others do set additional expectations on SWPMs, which encourages shippers to give up and just use all-plastic or “manufactured wood only” packing materials when shipping to them. But by and large, the ISPM 15 rules have brought great stability to international trade, with their unique combination of regulatory simplicity and severe penalty risk (nobody wants his customer’s government to destroy or reject his goods upon arrival in port!).

The ISPM 15 rules are a rare example of dozens of governments coming together in consensus for the common good, truly supporting commerce while providing genuine environmental protection… quite a far cry from the “manmade global warming” alarmists’ continuous efforts over the same time period, to destroy commerce in support of an environmental hoax, isn’t it?

When common sense prevails, there is almost always a solution, even when threats are severe. Human ingenuity, modern technology, and cooperation in the interest of economic prosperity can solve almost any challenge, if the free market is just given a chance.

And so, this year, and every year, as we walk, bicycle, or drive, enjoying the scenery of flora short and tall, young and old, let’s think of the enemies of that flora – those burrowing hitchhikers from far across the globe – and appreciate our trees and bushes all the more. As they bud and shoot and grow, from the greening of summer to the colors of autumn, the trees of America provide not only shade and beauty, but also the valuable lesson that no matter what the challenge, the free market can and will provide the solution, if it is just given the chance.

Copyright 2018 John F. Di Leo

John F. Di Leo is a Chicagoland-based international trade compliance manager and trainer, actor and writer. A licensed Customs broker since 1987, he has been a board member of the Illinois Small Business Men’s Association and the Ethnic American Council, and his columns have been seen regularly in Illinois Review since 2009. Permission is hereby granted to forward freely, provided it is uncut and the IR URL and byline are included.

Note: This is an economic feature in a political website, so naturally it does not constitute legal advice. For any specific compliance questions about the regulatory matters discussed herein, please reach out to your Customs broker, freight forwarder, attorney, or other trade compliance professional.

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Di Leo: Local Shade and International Trade

By John F. Di Leo -

As the weather warms in May, and neighbors start taking constitutionals around the neighborhood again, we enjoy the fragrance of the flowering trees – apple, cherry, magnolia – and the spring colors of the flowering hedges – lilac, forsythia, and rhododendron. True, the flowers don’t last long… so we enjoy them while we can.

As we watch, the buds grow fatter on the branches, as bursting leaves prepare to follow the spring blossoms. Once the early petals are shed, these bushes and trees will be covered with leaves, as the magic of photosynthesis takes over and enables our neighborhood greenery to thrive for another year, rewarding us with the tree-lined streets we treasure.

To look at them, you’d never know that there’s a silent attacker, burrowing deep inside some of our trees – especially the quieter ones, the non-flowering trees like our stately oaks, elms, white fringetree, and especially ash and maple – those invasive insects of distant origin that feed their young by destroying our trees.